SCENARIO $(30$ marks$)$

Zimmerman and Stein Ltd $($Z&S$)$ is a South African investment entity. Z&S is

constantly evaluating various market segments and industries to proactively identify

promising entities or entities of which the shares are undervalued, to invest in$.$

Two investment opportunities have recently come to the attention of Z&S as potential

investments $$ Ore Ltd and Bottella Ltd$.$

Ore Ltd:

Ore Ltd $($Ore$)$ is a South African public company that extracts and exports precious

metals to the international market. Among the foreign countries exported to$,$ is Italy.

Z&S performed preliminary evaluations to determine the potential returns that could

be made on an investment in Ore, as well as identified the likelihood of each of these

potential returns.

Potential returns to be

made by purchasing

Ore$$s shares

Likelihood

If the Rand weakens

against the Euro

$35\%55\%$

If the Rand$/$ Euro

exchange rate stays

constant

$24\%33\%$

If the Rand strengthens

against the Euro

$-9\%12\%$

Bottella Ltd:

Bottella Ltd $($Bottella$)$ is an Italian beverage manufacturer that export to foreign

countries. A large portion of Bottella$$s customer base that they export to consist of

South African customers.

ANNEXURE J: SUMMATIVE ASSESSMENT $2$

$107$ HFMN$230-1\_$Jan$-$Jun$2024\_$SA$2\_$V$3\_$ES$\_22012024$

Z&S has also determined the potential returns that could be made by purchasing

ordinary shares in Bottella, together with the likelihood of the potential share

manifesting.

Potential returns to be

made by purchasing

Bottella shares

Likelihood

If the Rand weakens

against the Euro

$-15\%55\%$

If the Rand$/$ Euro

exchange rate stays

constant

$19\%33\%$

If the Rand strengthens

against the Euro

$26\%12\%$

Z&S wants to invest a total of R$2120000$ in the two entities by investing R$1050000$

into Botella, and the remaining amount in Ore.

STEPS TO FOLLOW AND REQUIRED:

$1.$ Open the $$Expect Return$$ and $$Risk$$ tabs on the Excel Answer Book you have

been provided with on ColCampus.

$2.$ Perform research on the following Excel formulas:

$$ Addition, Subtraction, Division and Multiplication

$$ Square root and exponents

$$ SUM$-$formula

$$ Referencing between cells and between different Excel tabs

$$ Absolute referencing

$$ Covariance formula

$3.$ By ONLY using the above formulas $($amount typing is also not allowed$),$

complete the Excel answer book $($Expected Return$$ and $$Risk$$ tabs$)$ by

calculating the cells highlighted in yellow.

ANNEXURE J: SUMMATIVE ASSESSMENT $2$

$108$ HFMN$230-1\_$Jan$-$Jun$2024\_$SA$2\_$V$3\_$ES$\_22012024$

$4.$ On the tab $$Interpretation$,$ explain what a portfolio$$s covariance in general

means$/$informs one of$.$ Supplement your answer by interpreting the covariance

that you have calculated of the portfolio in the scenario and explain why this

result was obtained considering the two specific entities.

Evidence required:

Please submit the following as part of your completed assignment:

$$ Excel version of your completed assignment

$$ PDF version of all your completed sheets showing the amounts.

$$ PDF version of all your completed sheets showing the formulas you

used.

To get the formula view of each of your sheets, go to Formulas $>$ Show Formulas.

Your sheet will change so that all the cells where you entered formulas now display the

actual formula that you entered. Click on the $$File$$ tab in Excel, then $$Save As$$ and

save the document as a PDF$.$

Very important: Ensure the borders of your Excel document is properly set before

saving the Excel to PDF$.$

You may inspect the borders by selecting the $$View$$ tab in Excel and then $$Page Break

Preview$.$ The borders will then be shown as dotted lines. If you would like to change

them, click and drag them to the desired area.

Once you have saved your Excel to PDF$,$ inspect the PDF to ensure that the

information on the PDF is not too small as it will hinder the visibility when grading.

If too small, either change the borders or set the orientation of the Excel document$$s

layout to landscape before producing a PDF document again.

$(30$ marks$)$